During the peak months of the pandemic, the plant-based meat-alternative Beyond Meat (NASDAQ: BYND) seemed to be everywhere, from fast food menus to family dinners, but that surge in interest now seems to be waning. While it seemed for a time that meatless alternatives were truly taking off, layoffs, reduced sales expectations, and McDonald's (NYSE: MCD) decision not to include the McPlant burger on its permanent menu are all signs that we haven't reached a plant-based meat revolution.
"At the category level, we're seeing volumes for plant-based meats down 22 consecutive months now," said a consumer food analyst at Mizuho Americas, John Baumgartner. "We're positive on the future for plant-based meat, but this is a 20- to 25-year story."
Beyond Meat quickly became a powerhouse after its public offering in 2019, with huge gains in sales and share value.
However, in the past year, the plant-based meat company's stock has fallen nearly 83%, and it recently announced that it would be reducing its sales expectations for 2022. The company had forecasted a 33% increase in sales for the year, but it now says it only expects to see minor growth. Last month, Beyond Meat announced that it would be cutting its staff by 19%, or 200 positions.
Finally, easily the strangest Beyond Meat news involves changes in its pool of executives. In recent months, the company has lost four executives, including its chief financial officer and chief supply chain officer, as well as its chief operating officer, who was suspended after being arrested for allegedly biting another man's nose.
Issues at Beyond Meat and other plant-based meat companies have been a rude awakening for investors who've been eagerly expecting the vegan meat market to explode in size any day now. Some theorize that the reduction in sales for vegan meat companies is the result of inflation across the food market, but others worry that the companies have simply reached every consumer interested in their products.
That second explanation seems to be supported by the data: according to Deloitte's consumer products analyst Justin Cook, after a period of rapid growth, the percentage of consumers interested in meat alternatives has leveled off at 53%.
"The category had been growing at double-digit for a long time and was expected to continue, but what we saw this year is that the number of consumers who were buying it did not increase," he said.
Cook and other Deloitte analysts described several possible contributors to flattening consumer interest in plant-based meats. Along with inflation, consumers now just aren't as convinced that meatless options are healthier than animal products. There has also been pushback against companies that have adopted meatless products from customers who feel offering vegan options means going "woke".
"Go woke, go broke," one user wrote on a Facebook (NASDAQ: META) post from Cracker Barrel (NASDAQ: CBRL) announcing its new meatless sausage product. "You just lost a ton of your base. You obviously don't know your patrons."
However, there is also reason to hope that the current dip in sales is mostly tied to inflation. Over the past year, the 11.6% drop in plant-based meat sales has nearly matched the 11.8% drop in overall grocery sales. According to the research firm IRI, the biggest losses in the plant-based meat market were seen in the most expensive categories, while cheaper categories like frozen meatless product fell only slightly. Meanwhile, frozen meatless chicken nuggets actually saw a sharp increase in sales.
Similarly, the problems at Beyond Meat aren't cropping up at every plant-based meat company. Many companies' sales dropped significantly, but others have actually seen an increase in demand. Impossible Foods, which recently expanded its frozen selection, has seen "hypergrowth" over the past year, with its retail sales surging by 60%.
"We're not experiencing anything like what Beyond Meat has reported or some of the other brands in the space. Quite the opposite," an Impossible Foods spokesperson told reporters. "We launched in frozen more recently with a larger family size, and it's been very popular with both retailers and consumers."
There's one last potential problem with plant-based foods that none of these metrics fully illustrate: the taste.
Analysts at the financial institution Mizuho Americas conducted a survey to see why consumers aren't buying plant-based items, and respondents said they didn't like how the products taste, and that's a real problem. Analyst John Baumgartner says that companies rolling out sub-par items before they're ready could harm the entire industry.
"You're not selling iPhone version 1.0 and maybe it's not the best and greatest, but the consumer can upgrade to version 2.0, which has better graphics and keypad," said Baumgartner. "If you roll something out in the food industry that's not quite where it needs to be in terms of quality and taste and the consumer tries it and has a bad experience, he's not coming back."